Libya's militarized youth feed into economic woes

FILE - In this Sunday, Feb. 17, 2013 file photo, Libyan gunmen celebrate on the early morning of the second anniversary of the revolution that ousted Moammar Gadhafi, in Benghazi, Libya. More than 18 months since the end of Libya's civil war, the most attractive job for many of the young is still to join a militia. In fact, just under a tenth of Libya's labor force may be working as gunmen. State coffers are full of cash from rapidly reviving oil production, but rather than funding reconstruction, much of the money goes to buying off a restive population with state salaries, including to militias, effectively feeding a cycle of lawlessness. (AP Photo/Mohammad Hannon, File)

BENGHAZI, Libya (AP) — More than 18 months since the end of Libya's civil war, the most attractive job for many of the young is still to join a militia. In fact, just under a tenth of Libya's labor force may be working as gunmen.

Libya's government coffers are rapidly filling with cash as oil exports return to near pre-war levels, powering a 100 percent increase in GDP in 2012, according to a report this month by the International Monetary Fund.

But the economy of this North African oil giant remains in disarray. Unemployment, officially at 15 percent, is estimated by some as high as 50 percent. The private sector, decimated under ousted dictator Moammar Gadhafi, still barely functions. Reconstruction investment is largely on hold, and the weak central government is funneling much of its oil wealth into public handouts to quiet discontent, as Gadhafi often did. Other money is lost down the drain of corruption.

And still other funds end up fueling the growth of militias.

The state pays many militias, relying on them to serve as security forces since the police and military remain a shambles. The regular salary has drawn a flood of young Libyans.

Militias first rose up as "brigades" during the eight-month civil war against Gadhafi, and at the time their fighters likely numbered in the thousands. Now an estimated 200,000 people are registered by the government on the rolls of militias, according to the commanders in two of the biggest militias, Hafiz al-Agouri, of Libya Shield, and Ismail al-Salabi, of the Rafallah Sahati brigade.

That would mean more than 8 percent of the country's entire work force are in militias. The most recent World Bank estimate, from 2010, put Libya's labor force at 2.3 million people.

A Libyan businessman and an owner of a private construction company that has government contracts for rebuilding infrastructure in the eastern region bemoaned the lure of militia work among his own staff.

"My very skillful welder left because he got a job in a brigade that would not only give him triple the salary but he could work four days and take a week off," Nasser Ahdash told The Associated Press. He said he is unable to carry out the reconstruction work because the price of his contracts doesn't cover the rising costs of equipment, material and labor.

Saad al-Arily, a veteran Libyan economist, estimated that the government spent the equivalent of nearly $1 billion on militias in 2012. Each militiaman gets a salary ranging from $400 to $2,300 a month.

"The money spent on militias resembles the budget of an African country," he told AP. "Every day a young man forms a brigade just to get a salary."

In effect, the state pays forces that undermine its own rule and increase lawlessness. Militias carry out assigned security duties like guarding sensitive buildings, forming security belts around cities, or patrolling neighborhoods. But otherwise, they often act as renegades with their own agenda. Residents complain they run their own prisons, enforce their own rule over neighborhoods or towns, engage in kidnappings and extortion and spark gunbattles with rival militias. Some have hardline Islamist ideologies and have become notorious for imposing Islamic law restrictions.

In many ways, Libya's new rulers are continuing a patronage economy that Gadhafi propagated.

During Gadhafi's 42-year rule, the economy was solely dependent on oil and gas revenues. The state's sprawling bureaucracy was practically the sole employer, and most of the population depended on heavy subsidies on food and fuel and cash handouts. Bribery and embezzlement were common practice among government employees, with no oversight.

Gadhafi largely wiped out the private business class, confiscating their assets. For most of his rule, private business was depicted as exploitation and theft. At the same time, Gadhafi used the oil wealth to build a patronage system, buying off tribes and opponents with cash that was never accounted for.

Many Libyans say that Gadhafi left their country with two functioning institutions: oil and corruption.

Continuing the patronage style, the post-Gadhafi government has added more government employees. Around 1.5 million people now work for the state in a country of 6 million people, according to Abdel-Salam Nassaiya, head of the budget committee in National General Congress. Their salaries amounted to some $15 billion in 2012, a third of the budget, up from $6 billion in 2010.

During Feb. 17 celebrations marking the second anniversary of the start of the anti-Gadhafi revolution, Mohammed el-Megarif, the country's leader and head of the first elected National General Congress, proclaimed that a cash gift would be given to every citizen.

"In this glorious occasion, I would like to inform the great Libyan people of the generous award," el-Megarif told a crowd in Benghazi, where some chanted, "Leave, leave. You are no different than Gadhafi."

After Gadhafi's fall, Libyans saw oil revenues as the key for transforming their economy. After coming to a near halt during the war, oil production stormed back, reaching around 1.4 million barrels a day in 2012. The oil minister has said he expects that to rise to 1.7 million, close to prewar production. Oil revenues make up some 90 percent of the government's income.

As a result, the government budget in 2012 swelled to 68 billion dinars, ($53 billion) its largest ever. A new budget has not been approved by the parliament, which suspended its session after coming under assaults by militias.

But "the outcome was not what we hoped for," said Ibrahim Aboul Khair, the former head of the state Accountability Agency.

"We need to rebuild the economy, use revenues to train people and invest on people," he said. "There was supposed to be investment but the budget went to (government) salaries and subsidies."

Corruption has also been a drain. Last month, Prime Minister Ali Zidan revealed the extent of corruption in a program that provided a stipend of 3,000 dinars ($2,300) a month to rebels who fought Gadhafi's regime. Zidan said there were some 250,000 duplicated names on the rolls — meaning the state may have paid out hundreds of millions of dollars a month until the program was halted late last year because of the abuses.

Similarly, a program to pay for treatment abroad for those wounded in the war was halted when it was revealed that family members of powerful militiamen and officials received funds for plastic surgeries or just vacations abroad.

In January, el-Megarif got in a televised argument with the previous prime minister, Abdel-Rehim el-Keib, saying $5 billion designated for "administrative preparations and supplies" was wasted. He said 60 facilities, with lists of employees and budgets, were found to exist only on paper.

"If corruption continues at the same rate, it will threaten all programs of development and security in Libya," he said.

El-Keib replied that the $5 billion was spent on rebuilding hospitals, schools, offices and oil facilities.

On Friday, the IMF said in a report that Libya's GDP grew 100 percent in 2012, "reflecting a strong recovery from its collapse during the revolution."

The growth appeared entirely fueled by the oil sector. The report said it expected growth in the non-petroleum sector to pick up and average 15 percent over the next five years. It said "major changes in economic policies and institutions" are needed to reduce unemployment and that the government needs to limit the growth of the public sector and streamline subsidies.

Most worrying to many Libyans is the militias' expansion.

Militia commander al-Agouri said his Libyan Shield brigade, which officially falls under the Defense Ministry command but led by Islamist former rebel Wassam bin Hamed, recruited 8,000 people, increasing its ranks to some 13,000.

Ahdash, the businessman, said the militia phenomenon "is taking the country in the wrong direction."

"They have power and money in addition to their ideologies and loyalties," he said. "These will only expand their influence and more influence means more money ... When the time comes for the big battle over power, there will be struggle."